Making Ideas Work: Innovation, Strategy, Leadership and Latin American Markets

Tag Archives: reward

You don’t climb mountains without a team, you don’t climb mountains without being fit, you don’t climb mountains without being prepared and you don’t climb mountains without balancing the risks and rewards. And you never climb a mountain on accident – it has to be intentional.

Opportunity: we look for it every day. It’s what our organizations are built upon, it inspires us to create new products and it helps us set our sights and company vision on creating something of value; today’s best new ventures are those that act on an opportunity of changing (even just slightly) the status quo. But if there is opportunity at home, why consider expansion to a region like Latin America?

And that’s exactly the question posed to me this year by a group of executives in a stuffy office in downtown Quito, Ecuador. It’s an all too familiar question according to my colleagues in trade and investment promotion. Partners, clients and sponsors all want to know: “What’s the big deal about Latin America?”

Based on ten years of working in Latin America and conversations with hundreds of investors, entrepreneurs, employees and corporate executives, there are 5 reasons that seem to resurface when we talk about the “why” behind business expansion and opportunities in the region:

1) Heterogeneous
The fact that Latin America is a heterogeneous region gives companies a wide range of possibilities for market entry, collaboration and how they manage their operations. Countries in the region vary in their acceptance of foreign investment and ease of setting up a business representing opportunities for innovation, partnerships, and use of local resources. I have collaborated with international brands that have been wildly successful in this dynamic region – mainly because they didn’t try a monolithic approach to market entry and expansion in the region. BMW Group and their country specific local partnership strategy (usually allowing one well established business group to manage the brand in each country) is one example of a successful approach tailored to specific markets in the Latin American region.

2) Economic Powerhouse
Latin America represents a $4.8 trillion economy with about 600 million citizens. Brazil is seen as an economic powerhouse but there is no denying that rapidly growing Mexico and resource-rich countries like Chile, Colombia and Peru (the Andean Region) also have tremendous buying power. Buying power and growing number of consumers represents an opportunity for new ventures as well as entrenched players.

3) Burgeoning Middle Class
In the last 10 years, 50 Million Latin Americans have joined the middle class and present an opportunity for foreign companies not just as consumers but also as sources of talent from an increasingly well-educated and globally savvy middle class.

5) People
Latin American countries have high context cultures meaning there is a real focus on relationship- building and the “context” associated with doing business. While international companies studying their market entry strategy may find these nuances daunting – such as how connected you are – it is an opportunity for foreign firms to start with a clean slate and connect with the right people – and make the right impression – from the very start.

The risk-reward argument in favor of doing business in Latin America doesn’t quite cut it anymore; Latin America used to be touted as an opportunity for brave companies to make large amounts of money: “high risk brings high reward” people would say. But after helping organizations understand, engage and grow their market in Latin America in the last ten years, I have learnt that risk-reward is not the answer to why companies should “bother” with Latin America. Ventures that want to take advantage of opportunities in the region will likely enjoy monetary rewards as well as foster innovation and learning in their organization by diversifying their market, accessing new talent and resources, building a loyal following and creating a strategic contact network.